443 B.R. 575
Bankr. D.P.R.2011Background
- Hurricane filed a Chapter 11 petition on January 29, 2009 and was later converted to Chapter 7 on September 1, 2009.
- Debtor engaged Mr. Monge as insolvency and restructuring advisor; application for employment filed February 27, 2009 and approved March 2, 2009.
- Trustee objected to Monge's compensation (Docket No. 112), arguing pre-petition fees should not be approved and that the fees were excessive and not benefitting the estate.
- The court previously struck Monge’s application in its entirety based on the trustee’s objections; Monge moved for reconsideration and later sought relief from order.
- The court held that post-petition employment could not be retroactively approved absent extraordinary circumstances; Monge was not a bankruptcy petition preparer; and various fee entries were reduced or denied, resulting in a final award of $5,931.48 total (fees $5,035.11 and expenses $240.03).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-petition employment can be retroactively approved | Monge contends extraordinary circumstances justify retroactive approval. | Trustee asserts no extraordinary circumstances; delay not excused. | Retroactive approval denied; February 27, 2009 is the effective date; no extraordinary circumstances. |
| Whether Monge qualifies as a bankruptcy petition preparer under 11 U.S.C. § 110 | Monge argues he is a preparer due to services aiding the debtor. | Monge is a professional employed under § 327; not a preparer. | Monge is not a bankruptcy petition preparer. |
| Whether the compensation requested was reasonable under 11 U.S.C. § 330(a)(3)-(4) | Entries and time claimed were necessary and reasonable to administer the case. | Entries lack detail; some work not beneficial or not filed; partial reductions warranted. | Fees reduced or denied; total allowed $5,931.48 (including $5,035.11 in fees and $240.03 in expenses). |
Key Cases Cited
- In re Jarvis, 53 F.3d 416 (1st Cir. 1995) (limits post facto compensation to extraordinary circumstances)
- In re Trafalgar Enterprises, Inc., no official reporter citation provided in text (unclear) (discussed as precedent for retroactive employment effective date)
- In re Ponce Marine Farm, Inc., 259 B.R. 484 (D.P.R. 2001) (time delay and reasonableness of compensation standards)
- In re Fruits Int'l., Inc., 87 B.R. 769 (Bankr. D.P.R. 1988) (entries must be specific to justify compensation)
- In re Environmental Waste Control, 122 B.R. 341 (Bankr. N.D. Ind. 1990) (detail requirement for entries in fee applications)
- In re High Voltage Eng'g Corp., 311 B.R. 320 (Bankr. D. Mass. 2004) (applies §330 factors to determine reasonableness)
- Chas. A. Stevens & Co., 109 B.R. 853 (Bankr. N.D. Ill. 1990) (independent court review of reasonableness of fees)